Does Everybody Do It?

Measuring the Clinton foreign-contributions scandal. So what’s new?

Campaign finance is an arcane and confusing subject, filled with unspoken understandings. One of these is the distinction between rules that must be obeyed and rules that can be safely flouted. In the Republican primaries, for instance, aides to Bob Dole admitted that they were going to exceed legal limits on how much they could spend, an act commentators compared at the time to running a red light. Meanwhile, Bill Clinton and his aides were helping to develop the so-called “issue” ads produced by state parties–ads which, in theory, weren’t supposed to be co-ordinated with his re-election effort. And neither party even bothered to claim that the tens of millions being raised in so-called “soft money,” which cannot be legally used for federal elections, was being spent on anything other than the federal election. None of these clear violations was deemed to be especially scandalous, even by prudes at places like Common Cause. Meanwhile, though, a Dole supporter named Simon Fireman is confined to his Boston apartment, where he wears an electronic collar and ponders the $6 million fine he must pay for enlisting his employees at Aqua Leisure Industries, a maker of inflatable pool toys, in a scheme to contribute $69,000 to the Dole campaign.

A similar invisible line separates the campaign-finance violations that become major media scandals and those that go unmentioned or rate only as footnotes in the press. It is not immediately obvious why reporters are so fascinated by John Huang’s possible use of his position at the Commerce Department to raise money for his party, while they largely ignored the last two secretaries of commerce, Clinton’s Ron Brown and George Bush’s Robert Mosbacher, who were using the entire department as a fund-raising vehicle. Why is Newt Gingrich’s use of GOPAC to raise undisclosed contributions a scandal being investigated by the House Ethics Committee, while Republican National Chairman Haley Barbour’s front for avoiding disclosure, the National Policy Forum, rates as a nonstory?

I n fact, there is no logic to any of it. What’s considered an outrage, and even what’s considered a crime, are matters determined largely by accident. Advocates of reform are always happy to have a high-profile scandal, like the presently unfolding “Indogate,” to help them sensitize the public to just how seamy the whole business of campaign financing is. The last thing they’re about to do is explain away the latest revelations as just an exotically textured version of what goes on every day. And press coverage is largely driven by how big a fuss is made by members of the opposition–not by any barometer of relative venality. Right now, Republicans are making an enormous fuss about the Democrats, so the story is huge. But we must pause and ask: Are we making an example out of the DNC for misdeeds that everybody commits? Or did John Huang and James Riady–and perhaps Harold Ickes and Bill Clinton–really do something unusually bad in the last campaign cycle?

Much hinges, of course, on facts we don’t have. Huang may have asked all his Asian contributors whether they were legal residents of the United States and been misled by them. There’s no hard evidence that he did DNC business at Commerce or government business after Clinton moved him to the DNC in 1995. But assuming, for purposes of argument, that most of what has been alleged by Republicans is true, the Indonesian scandal potentially involves three categories of wrongdoing: 1) accepting illegal contributions; 2) trading favors for contributions; and 3) misusing a government position to raise campaign money. Actually, there is a fourth question–whether Huang violated federal conflict-of-interest rules by dealing with his old company, the Indonesian-based Lippo conglomerate, while he was a midlevel official at the Commerce Department. But that’s a matter of personal corruption unrelated to the Democratic Party financing, so I won’t dwell on it here, even though it’s potentially the most serious charge against Huang.

Q uestion 1: The DNC has now returned nearly half of the $2.5 million in soft money raised by Huang from Indonesian and other Asian-American sources. Assuming that these contributions were illegal because the contributors weren’t legal residents (something that has been fully established only in the case of one $250,000 Korean contribution), did Huang and the DNC do anything out of the ordinary?

Answer: Not really.

There are examples beyond number of simply illegal contributions that the press and public just shrugged off. Even Pat Robertson got busted in 1988 for the use of a Christian Broadcasting Network plane–his travels were valued at $260,000. If one focuses on the narrow category of contributions that are illegal because they come from foreigners (even though it is arguably no worse than any other category of violation), there is still little novelty to the Huang affair. Federal Election Commission files disclose many examples of money taken illegally from foreign nationals: Japanese interests contributing to candidates in local races in Hawaii, South Americans giving to the Democratic Party of Florida, and so on. Just a few weeks ago, the RNC returned $15,000 to a Canadian company called Methanex after the contribution was disclosed in Roll Call.’s recent $1 million contribution to the California Republican Party may fall into this category as well. The same goes for contributions that are illegal by virtue of their having been made “in the name of another,” an issue that has surfaced in connection with Al Gore’s Buddhist temple fund-raiser. The FEC has frequently disallowed contributions made to both parties under aliases.

I f the Huang case is novel, it would have to be as a deliberate and systematic violation of the laws regarding contributions by noncitizens. In terms of being systematic, there isn’t much of a case. Both parties have employed ethnic fund-raisers–Jewish, Korean, Greek, Chinese–for many years. Newt Gingrich held a Sikh fund-raising event last year in California. in 1992 was Yung Soo Yoo, who makes John Huang look like a piker when it come to sleaze. One of the co-chairs of Asian-Americans for Bob Dole was California Rep. Jay Kim, who is under investigation by the FEC for taking illegal contributions from four Korean companies.

According to those with experience in fund raising, it is often a delicate matter to establish whether ethnic donors are eligible to give. When someone offers to write you a check for $5,000, you do not ask to see a green card. The reality that neither party is in the habit of investigating its donors is illustrated by various outrageous incidents. In 1992, for example, Republicans got contributions totaling $633,770 from a Japanese-American with Hong Kong connections named Michael Kojima. No one bothered to ask where Kojima, a failed restaurateur with ex-wives suing him for nonsupport, got the money. Ironically enough, his biggest creditor turns out to have been the Lippo Bank of Los Angeles, where he owed $600,000.

Huang was not really an innovator; he was simply more successful than his predecessors in both parties in tapping ethnic subcultures for cash. What Huang’s higher-ups at the DNC can most be faulted for is not following suspicions they should have had about the huge sums he was reeling in. Instead, they looked the other way. In 1994, the DNC abandoned its own procedure for vetting contributions for legality. We don’t know exactly why this happened, but it’s a good bet that it had something to do with the pressure coming from the White House to raise extraordinary amounts of money for the upcoming 1996 race. The culture of fund-raising rewards quantity, not care. It discourages close scrutiny and too many questions. The less you ask, the more you get. And given that there has been no real enforcement of these rules in the past, fund-raisers haven’t lost a lot of sleep about contributions turning out to be tainted. If the money goes bad, you simply return it with the appropriate regretful noises.

Question 2: Is the Lippo scandal an egregious example of a political quid pro quo?

Answer: Definitely not.

Examples of favors in exchanges for campaign contributions are plentiful. Consider, for instance, the relationship between Bob Dole and Chiquita. In 1995, Dole introduced legislation to impose trade sanctions on Colombia, Ecuador, and Costa Rica–but not Honduras, where Dole’s favorite bananas are grown. Why was a senator from Kansas so interested in bananas? It might have had something to do with Chiquita giving $677,000 to the Republican Party in the last campaign cycle or the generous offer by its CEO, Carl Lindner, to let Dole use the company jet. (“Sen. Dole has taken this position because it is right for America,” Dole spokeswoman Christina Martin said earlier this year. “To suggest any other reason is totally absurd.”) Or, there is the relationship between.

This kind of treatment for big contributors is quite routine. In the Indonesia case, however, there is as yet no evidence that President Clinton did anything about his backer James Riady’s concerns over trade with China and Indonesia beyond listening to them. Nor is there likely to be any evidence: Big foreign-policy decisions simply aren’t susceptible to personal favoritism the way EPA regulations are.

Q uestion 3: Did John Huang break new ground in exploiting his government office for campaign-fund-raising purposes?

Answer: No.

The honor here actually goes to Robert Mosbacher, George Bush’s secretary of commerce. As Bush’s campaign chairman in 1988, Mosbacher invented the Team 100–a designation for the 249 corporate contributors who gave $100,000 or more in soft money to the RNC. When Mosbacher became secretary of commerce, members of the team were rewarded in various ways, including being invited by Mosbacher on trade missions around the world and, often, being given ambassadorships. (“That’s part of what the system has been like for 160 years,” Mosbacher said when questioned about it at the time–a judgment the press apparently agreed with.) Mosbacher’s last act as commerce secretary was a tour of 30 cities to meet with business executives about how he could help them with exports. When he left the department shortly thereafter to run Bush’s re-election campaign, he turned to the same executives for contributions.

In his own use of the Commerce Department to dun corporations for campaign funds, Ron Brown was Mosbacher’s disciple, though he proved to be an even greater talent than his master. As chairman of the DNC in the period leading up to the 1992 election, Brown followed the path laid by Tony Coehlo, the infamous chairman of the Democratic Congressional Campaign Committee. Coehlo (as documented in Brooks Jackson’s Honest Graft) was the first to try to compete with the Republicans for corporate soft money. Brown devised for the DNC a “Managing Director” program to match Mosbacher’s Republican “Team 100.”

When Brown became secretary of commerce in 1993, the managing directors were not forgotten. Fifteen DNC staff members went with him to Commerce, and they knew who the new administration’s friends were. One of those who went with Brown was Melissa Moss, who took over the Office of Business Liaison at Commerce. This was the office that selected participants for the high-profile trade missions to such places as China and Indonesia, which became the focus of Brown’s career at Commerce. On these trips, Brown functioned as a personal trade representative for companies like Boeing and AT&T. According to an article in the Wall Street Journal by a reporter who went along on Brown’s China trip, seats on his plane were essentially sold off in exchange for soft-money contributions.

John Huang was merely a cog in this machine. When he left the Lippo Group in 1994, Huang became a deputy assistant secretary in the International Trade Administration, the section of the Commerce Department that handles trade issues. Under oath, Huang has claimed he had only a “passive role” in the foreign trade missions–whatever that means. It all. But that’s the Commerce Department Mosbacher created, and which Brown perfected. To present the Huang story as something new, reflecting the uniquely severe moral failings of William Jefferson Clinton, is absurd.

So if, in fact, both parties are equally implicated in all the categories of campaign-financing sleaze raised by the Lippo case, why is the Indogate scandal such a big story? There are three reasons: reformers, reporters, and Republicans. Reformers are happy to have any good example to illustrate the evils of the system. Reporters are trying to compensate for suggestions that they are biased in favor of the Democrats. And Republicans, who have been the black hats of the campaign business since Watergate, are seizing an opportunity to finally turn the tables.

The Republican outrage may be hypocritical, but in another sense, it is sincere. GOP leaders are furious at losing an advantage in corporate fund raising that dates back 100 years, to the election of 1896, when William McKinley’s legendary money man Mark Hanna mobilized American business to stop the Democratic populist William Jennings Bryan. In the 1980s, the Republican advantage in total donations was still as high as 5-1 and never less than 3-1. In the 1992 election cycle, however, Ron Brown whittled it down to 3-2, thanks to corporate contributions. In 1996, the Democrats nearly caught up in the chief corporate category: soft money. With the help of Huang and others, they raised $102 million this year–almost as much as the Republicans’ $121 million. The way they did it was simple: imitation.